Botox and VAT

The price of beauty is set to rise

Harry Singh reports on the outcome of a recent court case, which judged botulinum toxin injectable treatments to be subject to VAT.

People don’t tend to get overly concerned about VAT – after all, as the adage goes, nothing can be said to be certain, except death and taxes.

Once in a while, however, it hits the headlines and can be a subject of interest – think M&S’ chocolate teacakes and McVitie’s Jaffa cakes, their respective owners wanting their products to be declared ‘cakes’ not ‘biscuits’, the latter description originally chosen for both by Her Majesty’s Revenue and Customs (HMRC).

This is because UK law considers cakes and biscuits to be necessities but chocolate-covered biscuits a luxury, thus VAT is payable.

What’s it got to do with dentistry?

This kind of anomalous thinking runs throughout VAT rules and regulations and, earlier this year, they were challenged once again, this time in relation to botulinum toxin injectables.

While medical treatments aren’t subject to VAT, cosmetic procedures are – and one clinic went to court to argue that the way they use botulinum toxin is ‘medical’.

The truth is, this has always been a grey area and it needed clarification.

The appellant, Skin Rich, describe their use of botulinum toxin as an ‘anti-wrinkle rejuvenation treatment’. In their court documents, they argued that the use of botulinum toxin to reduce lines and wrinkles etc. has a positive effect on quality of life and confidence.

The provider of these treatments at the clinic, Dr Lalani (a dentist) saw, ‘improved confidence and feeling better about yourself as a medical reason for seeking treatment.’

However, tribunal judge Jeanette Zaman was not satisfied that the ‘principal purpose’ of the ‘injectable treatments’ was to ‘protect, restore or maintain’ health, rather than ‘for cosmetic reasons’ (full details of the submission and response are available at https://bit.ly/2krNVYL).

This is a first-tier judgment, and whether Skin Rich will take HMRC to a higher court remains to be seen but, for now, a legal precedent has been set and the type of botulinum toxin treatments that dentists perform will attract VAT.

Be proactive

Chances are, HMRC will go after the big chains first, but individual dentists need to be prepared, as well.

We know that the VAT threshold is £85,000 for this financial year (2019/20) and figures suggest that most dentists involved in facial aesthetics achieve this in turnover before we even talk dentistry. Don’t forget, oral hygiene products also attract VAT.

My advice is to keep a careful, monthly watch on your total turnover for facial aesthetics and oral hygiene sundries and, if the VAT threshold is reached, you need to register for VAT.

Then you have two choices – to pass the VAT on to the patients or absorb it yourself. It’s not a great choice, but there it is. It may change in the future, but for now that’s where we are – ignore it at your peril!

Call 07711 731173 or email [email protected] for more information on why you should choose BTC to help you achieve a successful aesthetic business.